neoliberalism

With tensions between Lebanon and GCC countries rising everyday, it is essential to examine how Lebanon’s economy has become dependent on oil-producing states and the man who helped make it happen. Paul Cochrane reviews the latest biography on arguably the most powerful Prime Minister Lebanon has ever seen.

By Paul Cochrane

Academic Hannes Baumann notes early on in Citizen Hariri: Lebanon’s Neoliberal Reconstruction (Hurst, 2017), that “Rafik Hariri became even more politicized in death than in life”. This is especially true when it comes to powerful political figures with sizable organizations behind them that want to capitalize on assassination.

Posters of Hariri, like so many other slain Lebanese politicians still adorn billboards 12 years later, while for years outside the Mustaqbal TV building in Kantari there has been a billboard demanding al haqiqa (the truth, about his assassination) with an electronic ticker beneath showing the number of days since Hariri was killed in a macabre blast outside the St. George’s Hotel on Beirut’s Corniche.

The son of a Saida fruit-picker, Rafiq Hariri in some sense bucked the historical trend, having been neither a militia leader nor one of the established zu’ama. While a ‘self-made man’, Hariri was nonetheless politically assisted to be twice prime minister and a driving force in the country’s post Civil War political-economy landscape.

Like F. Scott Fitzgerald’s The Great Gatsby, who inherited tremendous wealth from a benefactor, Hariri benefited from the largess of the Saudi royal family, initially with construction deals and later as an interlocutor for the House of Saud in Lebanon during the civil war.

Hariri emerged, like Najib Mikati and others, onto the Lebanese political scene as the result of petro-dollar contracting fortunes initially made in the Gulf, crucial to understanding Lebanon’s post civil war environment. This is why Baumann, a German academic currently teaching at Liverpool University, opted to use an individual biography – Hariri’s – to explain social, political and economic change in Lebanon.

Neoliberal Lebanon

While there was little inkling in the 1980s that Hariri would rise to such political prominence, he certainly had business interests in the ‘old country’. In 1983, Hariri took control of top positions of Banque Mediterranee (BankMed, now 100% owned by the Hariri family), and in the same year drew up plans to reconstruct downtown Beirut. As Baumann put it, “it is hardly surprising that a contractor such as Hariri would regard a real estate project [Solidere] as his country’s salvation”.

Preliminary work began that year via Hariri-owned Oger painting the facades of buildings in the Mara’ad area and building a prototype block of houses in Suq Tawil, while the army, backed by the Lebanese Forces, fought an eight hour battle to evict the war-displaced squatters from Wadi Abu Jamil. Such moves reflected Hariri’s ability to wheel-and-deal to get projects off the ground, working with President Amin Gemayel to develop downtown, the littoral north of Beirut (around Dbayeh), and the southern suburbs.

Yet while Hariri had Gemayel’s backing (but not political support, at least to be appointed prime minister as the Saudis wanted) it did not allow him to develop the southern Beirut shoreline into high-end tourism and luxury residences: “The predominantly Shia inhabitants of the area interpreted the resettlement plans by the Maronite president and the Sunni contractor as an attack on their community,” writes Baumann.

Baumann’s text, emphasized in the subtitle Lebanon’s Neoliberal Reconstruction, is particularly adept at explaining how Hariri brought the global economic zeitgeist of the post-cold war era – neoliberalism – to the country and gave it a local twist.

As Baumann observes, “Hariri and his technocrats were importing global templates of neoliberal urbanism, currency management and privatization, but regional and domestic factors were setting the limits of Lebanese neoliberalism.”

Neoliberalism is one of those sticky terms that is hard to exactly define, as Baumann explains. He defines it as both an economic orthodoxy and a class project that restructures the state, emphasizing these inherent contradictions of “illiberal and monopolistic practices with free-market rhetoric.”

Privatization for example is a top goal of neoliberal doctrine, but Lebanon’s clientelist structureprevented the selling-off of state utilities and assets, as politicians wanted to keep hold of ministries and, importantly, retain jobs for their constituencies.

“Hariri’s policies concentrated wealth, resulting in high unemployment and continued poverty, while most Lebanese remained dependent on politicians for the provision of jobs, education or health care. This was the economic basis of clientalism. Inequality and a lack of public services were a direct result of Rafiq Hariri’s neoliberal economic policies.Neoliberalism thus reproduces the political economy of sectarianism,” writes Baumann.

Solidere

When it comes to Solidere, the company created in 1994 to reconstruct downtown, Hariri used the neoliberal logic of the state playing a major role in extracting value from the city at the expense of the populace. This included signing over the land reclaimed from the Normandy landfill to Solidere, tax breaks for 10 years and not properly compensating many of downtown’s original property owners (a point still made in big letters on the side of the St. George’s Hotel: ‘Stop Solidere’).

As Baumman observes, “the mechanism by which property was expropriated illustrates one of the contradictions between neoliberal orthodoxy and practice: while one of the main functions of the liberal state is to defend property rights, Solidere represented an enforced, rather than avoluntary, transfer of such rights. The interventionist neoliberal state enables new forms of accumulation by dispossession.” Hariri’s real estate obsession as a core economic driver has also had long lasting negative ramifications: a building bonanza that has squeezed the less well-off out of the capital, cemented over archaeological sites, and privatized the few remaining public spaces, including beaches.

Hariri’s plan for economic reconstruction being based on physical infrastructure was a “fallacy”, writes Baumann, as instead the Lebanese economy was absorbed into the rentier system of the Gulf oil states and as an outlet for Gulf capital (by rentier he means an economy which derives all or much of its income from resources, such as hydrocarbons, while another definition is an economy deriving income from property or securities – so not industry or manufacturing). Without the Gulf and its petrodollars, argues Baumann, Lebanon would be on a slippery downward economic slope.

Indeed, Solidere gives an indication at the micro level of how the whole country could be in economic dire straits if the Gulf connection sours. For several years downtown (Beirut Souks excepted) has been a ghost town with restaurants shuttered, and stores having moved out due to the drop in Gulf tourism. As of August 2017, 18.7 percent, or 250, of all residential apartments in downtown have not be sold, worth $750 million (the average value per apartment is $3.1 million), according to RAMCO figures.

The current malaise in much of downtown is indicative of one the problems of utilizing a neoliberal urban model in a not very stable part of the world: the Arab-Israeli conflict and its ramifications for Lebanon; Syria; and regional and global powers’ involvement in Lebanon and the wider Middle East.

Baumann links Hariri’s Solidere plans to his technocrats, supposedly apolitical globalization experts that were above Lebanon’s political sectarian fray, who developed Solidere and then joined his government. “They spoke the language of neoliberalism as an economic orthodoxy. They had allied themselves with the Gulf capitalist Rafiq Hariri, who was using neoliberalism to assert the power of this faction of capital in the Lebanese economy”, colonizing “state institutions and repurposing them to serve their goals”.

But these ‘apolitical technocrats’ got caught up in sectarian politics, not just by virtue of being connected to Hariri, while Hariri himself had to increasingly play the sectarian card in his own politics, especially from 1998 onwards among his Sunni constituency to get his party elected.

Hariri began “to pose as the main defender of his community’s political interest, and his philanthropy allowed him to claim Sunni leadership in Beirut by neutralising the Maqasid association – thus political damaging Tammam Salam – and expanding Hariri Foundation health centres”.

It was a strategy however that did not always work.As Baumann observes, in 2004, Hariri was far from popular among his Sunni constituency, including in his hometown of Saida – “a list backed by Nasserite MP Musata Sa’d won all 21 seats on the council, defeating Hariri’s list”. In Beirut, the Unity List won all 24 seats, “but a low turnout of only 23 percent undermined the image of victory”.

As Baumann observes, politicians were willing to play along with neoliberalism when it suited them, but not when it would challenge their power base.

Banks, Debt and High Interest

It was Hariri’s meddling with fiscal policy however that had major ramifications for the country, which continue to hang like a Damocles Sword over all Lebanese heads. Hariri made the decision to peg the Lira to the US greenback and seriously ramp up debt to fund reconstruction.

This led to a ‘merry go-round’ of government borrowing at high interest rates and Lebanese commercial banks overwhelming financing that debt. On the one hand this has caused Lebanon to have one of the highest debt to GDP ratios in the world, while secondly has enriched the elite and the banks. As AUB’s Jad Chaaban has noted, some 5 percent of the population control over 70 percent of the wealth in the banks.

Equally devastating for the economy, and where Hariri’s neoliberal agenda differed from elsewhere, was that high interest rates discouraged the banks and the wealthy from investing in new businesses or the Beirut Stock Exchange (which has just 15 listed companies, including Solidere). Indeed, why would you, when you could get around 15 percent during the early Hariri years, and today, 6 percent or more on the Lira.

As Freddie Baz, chief financial officer at Bank Audi, said in 2010, “Today it is a rentier economy; if I can still get 6 to 8 percent interest, why should I understand (invest in) the stock market?”

Billions of dollars in profits have been made from the debt, and in typically neoliberal outcome, little has been given back, while banks are strongly linked to politicians.

As Baumman notes, “lending to the Lebanese government remains the backbone of the banks’ business. In October 2015, claims on the public sector accounted for 20.6 percent of total assets of Lebanese commercial banks, while 38.1 percent were deposited with the central bank.”

A vessel for Gulf investment

Baumann ends his book on a negative note on the country’s contemporary situation. He argues, as have others, that Lebanon could very well be banking on magic, given the high debt-to-GDP ratio, the weak economy, minimal foreign direct investment, and the lack of a comprehensive economic policy.

Furthermore, the local economy is overly dependent on Gulf petrodollars, be it in terms of remittances from Lebanese working in the Gulf (two-thirds of all remittances), to Gulf investment, capital and tourism. The latter has largely dried up due to the Syria conflict, and the Gulf’s economic fortunes are looking less rosy than they have been in decades, due to low oil prices and economic diversification moving at a snail’s pace.

“Lebanon has become a vessel for Gulf investment, and is now almost completely dependent on the oil monarchies. Rafiq Hariri was the chief architect of this dependence…Lebanon is tied to cycles of boom and bust in the Gulf,” writes Baumann.

The Gulf states have left it too late to wean themselves off oil, and Lebanon has left it too late to wean itself off the Gulf. As Baumann acerbically concludes, “Lebanon still has little to offer beyond mountains, beaches, a pleasant climate and clever bankers. Rafiq Hariri took no steps to transform the Lebanese economy to a more sustainable model. His political rivals – mainly former militia leaders – have no workable model of economic development beyond predatory rent-seeking through state largess.”

While Hariri’s political-economic legacy negatively impacted the majority of Lebanese and has saddled the public with a gargantuan debt, even his actual death has cost the Lebanese a pretty penny. The Special Tribunal For Lebanon (STL), set up to investigate his assassination, has already cost north of $325 million, with 51% coming from UN member states, the remaining 49% from Lebanon.

Paul Cochrane is an independent journalist based in Beirut, covering the Middle East and Central Asia. His work has been featured in over 80 publications, including Reuters, Money Laundering Bulletin, Middle East Eye, Petroleum Review and Jane’s. You can find his work at www.backinbeirut.blogspot.com

An LBC camera crew has become the latest victim of violent Lebanese real estate companies seizing the country’s diminishing natural shores, destroying essential ecosystems for profit and assaulting anyone who tries to document their activities. The LBC crew was violently attacked on Wednesday while filming a new resort being built in the tiny village of Mansouri in South Lebanon, home to the country’s only untouched sand beach and rare sea turtle reserve.

The attack was recorded on the TV reporter’s cell phone and is now making the rounds on Facebook. As soon as the news camera pans toward the resort– built directly onto the public coastline, in what appears to be a clear violation of the constitution and international maritime conventions–a man comes charging toward the TV crew with his fist raised. He throws the cameraman to the floor and then yanks him up by his shirt, shouting in his face: “What are you doing you dick!

He then grabs a man helping the crew and holds him by the shirt: “Do you know who I am? If I want to shoot you I will shoot you, you dog!”

“Get the hell out of here,” he repeats, adding in the crudest terms: “kissikhtkoon bi aiiry(I’ll put my d*** in your sisters’ p****)!”

The man then approaches the woman being interviewed, Mona Khalil, who manages the turtle reserve and operates a small bed and breakfast nearby the new resort development, whose owners have not been revealed. The man rushes toward her and says. “I will burn tires in front of your house on orders of the Hezb (Hezbollah) and the Harke (Amal Movement).”

The cell phone footage was used to open the LBC news bulletin, which condemned the destruction of Lebanon’s coast. It was also featured in the reporter’s news package and the broadcaster even ran a full in-studio interview with the reporter Sobhiya Najjar, for a first hand account on the attack she and her cameraman, Samir Baytamouni experienced.

Najjar said she was prompted to investigate the story after seeing a Facebook post by Khalil, who has been vigilantly documenting the resort development since construction began. She says the construction has been taking place slowly and secretively, and that the resort will put the turtle nesting project and the entire ecosystem at severe risk.

The attack began when the reporter was looking at the social impact side of the story by interviewing a young boy asking him what would happen if the beaches were privatized and closed to the local community. At that moment the man came out of nowhere swinging and punched the cameraman in the face.

“Of course this developer must be afraid of our reporting because he just attacked us immediately, he didn’t even try to talk to us or ask who we were,” Najjar said.

Because the village of Mansouri is so small and has no mayor, Najjar said she requested and was granted permission from a local administrative official in Tyre before heading out to the site. But that same official curiously later accused her and the crew of breaking into the site and instigating violence against the assaulter.

The official also promised to provide the necessary permits proving that the resort was “legal” but then said the documents could only provided if Najjar handed over the attack footage. She simply told him he would see it on the evening news.

At this point, the interviewer also reminds viewers that according to a law recently passed by parliament, the media and the public have the right to access all government decisions and legislation.

Najjar ends by noting that this is not the first time her team has been attacked while reporting on a resort, with similar experiences in Adloun, an endangered coastal archeological site, as well as Ramlet El Baida, Beirut’s only public beach. Cameraman Baytamouni has also been attacked multiple times in the past.

LBC reported that the assailant was arrested and the crew waited at the turtle reserve until an army escort arrived. But some worry the man could be bailed out of jail at any moment and that there will be no accountability for those further up the chain of command. It remains unclear who owns this resort.

It’s also important to note that not all journalists and citizen reporters carry the weight of LBC–one of the country’s largest and most influential media outlets– with its high level political and military contacts to get out of a jam. In May, an activist was attacked and his phone destroyed when trying to document the construction of Eden Bay resort in Beirut, which has also been built directly on the public sand coastline.

In February, straw huts used at the public beach nearby the Eden Bay resort were reportedly set on fire. Those who manage the area have frequently mobilized against the Eden Bay resort.

Arsonists apparently set fire to the straw huts at Beirut's only free public beach. This is the same beach that is being eyed by private developers. Will the police investigate?

And in November of last year, an activist resisting the Eden Bay resort by pulling out its dredging hoses (reportedly installed illegally and subject to a constitutional lawsuit) was beaten and bloodied, as shown in this video:

Activist reportedly beaten after trying to sabotage dredging work at private high rise project (Eden Rock) on Beirut's…

Finally I have personally been assaulted by developers when photographing ancient ruins discovered during the excavation of the massive District S project in downtown Beirut back in 2013. Site workers and supervisors locked me inside the project gates, tackled me and twisted my arms until I erased all photos I had taken of the ruins. The project is now going forward and all traces of the ancient history of Beirut on that spot have been erased. See previous post:

The question begs asking: are real estate developers more powerful than the state itself? How exactly did we relinquish control over our country and its scarce natural resources to these violent, destructive and self-serving firms?

All of these attacks raise important questions about the lawless state of Lebanon’s multi-billion dollar real estate industry, its frequent destruction of public space and ecosystems and its intimate relationship with the country’s leading politicians, who have routinely bent or broken laws to make projects happen. Above all the real estate industry’s immense profitability is made possible by a shameful lack of environmental or labor regulations compounded by an utter lack of taxes paid into the system to cover the damages and drain on resources and infrastructure these mega projects cause.

In fact, as I have reported for the Guardian, there are over 1,000 illegal resorts built on Lebanon’s coast making immense profits and paying no taxes with many owned by politicians themselves. While police take pains to crack down on minor violations such as destroying tin fisherman shacks along the coast or possession of small amounts of cannabis among poor farmers, the police fail to take any action against multi-million dollar resorts and their wealthy and well-connected owners. And let’s remember these projects are not only local–many are financed, designed or executed by multinational corporations, regional, Western and global, seizing upon the opportunity to exploit a developing market with weak law enforcement and low to nonexistent tariffs or regulations to ensure public health, safety or sustainability.

The only upside to this story is that exposure and shaming of these resorts and destructive projects is gaining ground with activist campaigns mushrooming over recent years and growing more sophisticated in their use of technology, visualizations, distribution channels as well as major lawsuits being launched. See this previous post for more details on the battle to save Lebanon’s coast:

Of course all this exposure is being made possible by advances in the breadth and reach of social media, but also by old school print and TV media, which is becoming increasingly bold.

At the end of her interview, Najjar is asked if she will continue to report on seafront projects despite the dangers posed to her and her crew.

“Of course. We are not here to do regular reporting. We are here today to play a role as the fourth estate. We are not here just to represent ourselves, we are here to represent the public interest.

You know, no one dared even to speak to us on camera in Tyre. This shows you the kind of political backing this project has.”

Perhaps it is time responsible real estate developers also exercise some social and moral responsibility for the immense profits they are making. If there are ethical construction and real estate firms in Lebanon, will they condemn this activity and be transparent with the public? Or will they and the country’s politicians remain silent and complicit in their colleagues’ behavior?

A lot of you have probably seen the now viral cell phone video shot in the Beirut Souks mall earlier this summer. It’s a great pick-me-up, if you are losing hope in humanity (and in Lebanon and the Middle East in particular these days.) Spoiler alert: Grammy-award winning artist Seal sings a duet with the young street performer and ends by asking him to play at his concert later that evening.

I’m not sure if Seal got a hint of this, but he did note that it was “slim pickings” to find a busker or street performer in Beirut. This may be because performers have been manhandled and hauled away by security forces as I witnessed and documented in this post a few years ago.

Seal also notes that despite Solidere’s offer of free-wifi (one of the many ways the corporation claims to give back to the city) the internet is actually “nonexistent” and thus he is forced to upload the video from his hotel room later on.

It all starts when Seal shoots a brief intro video outside the Souks shopping mall, which used to be series of famous actual souks or open air markets in prewar Beirut (until Soldiere and its elite urban planners decided Gucci and Prada would be a better fit.)

Seal then “stumbles upon” Peter Choucanii, a 21-year-old with a beautiful voice who has been performing in local clubs. When asked if he performs here often, Choucanii says he doesn’t and prefers to perform in other cities in North Lebanon like Jbeil and Batroun. It’s never made clear why he doesn’t perform on the streets of the city he lives in, where there is far more traffic than distant towns. But the two create a lovely performance. You can watch it here:

Now Choucanii is not overly surprised to see Seal (unlike another street performer he encountered in Manchester who was starstruck) and Seal later admits from his hotel room that the performer was given advance notice that he was coming, which was not what he asked for.

It’s hard to say to what extent this encounter was staged, but I wonder if the Solidere private security would have just stood back and watched if a famous star was not involved or if the street performer was not a good looking young kid singing in English instead of a poorer-looking Lebanese, Syrian or Egyptian singing in Arabic.

And it’s not just the Souks. Other Solidere faux public spaces such as Zaitunay Bay have signs that explicitly ban unauthorized music, food or any type of public panhandling.

What Seal is doing with street performers is a laudable act of using celebrity power for public good. And as Seal often often notes: “the best performers can be found on the street.”

Maybe Solidere and the Lebanese authorities should listen to that advice. Because if people were allowed to sing and express themselves in public places, maybe more talented people could be spotted and given a chance, especially youth from disadvantaged backgrounds. Beyond that, street music adds a texture and a serendipity to the city, which is largely lost in a manicured and corporate-controlled environment like “downtown Beirut.”

Some of the greatest cities in the world are known for their street music. Why should Beirut be any different?

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Thanks to Marshall for reminding me about this video, which reached him as far away as Texas.